YRC Worldwide Reports First Quarter 2016 Results

OVERLAND PARK, Kan., April 28, 2016 (GLOBE NEWSWIRE) -- YRC Worldwide Inc. (NASDAQ:YRCW) reported consolidated operating revenue for first quarter 2016 of $1.120 billion and consolidated operating income of $13.4 million, which included a $0.3 million gain on property disposals. As a comparison, the company reported consolidated operating revenue of $1.186 billion for the first quarter 2015 and consolidated operating income of $3.7 million, which included a $1.3 million loss on property disposals.

Financial Highlights

On a non-GAAP basis, the company generated Adjusted EBITDA of $62.9 million in first quarter 2016 for a consolidated Adjusted EBITDA margin of 5.6%, and a $4.1 million increase compared to the $58.8 million of Adjusted EBITDA reported in the prior year comparable quarter (as detailed in the reconciliation below).

Last twelve month (LTM) Adjusted EBITDA increased to $337.4 million for a consolidated Adjusted EBITDA margin of 7.1%, and an improvement of $57.0 million from the $280.4 million of LTM Adjusted EBITDA in the first quarter of 2015.

The total debt-to-Adjusted EBITDA ratio improved from 3.90 times in the first quarter 2015 to 3.20 times in first
quarter 2016.

Reinvestment in the business continued during first quarter 2016 with $19.8 million in capital expenditures and new operating leases for revenue equipment with a capital value equivalent of $33.4 million, for a total of $53.2 million which is equal to 4.75% of operating revenue for the quarter. This total is in line with the $56.4 million of reinvestment in first quarter 2015. The vast majority of the investment was in tractors, trailers and technology.

Cash, cash equivalents and Managed Accessibility (as defined in the company's most recently filed periodic reports on Forms 10-K and 10-Q) under the company's ABL facility increased by $46.5 million at the end of the first quarter 2016, compared to a year ago.

Operational Highlights

YRC Freight recently added its new Accelerated service which allows customers' non-guaranteed shipments to reach their destinations one to two days faster than standard transit times.

Improved yield from continued pricing discipline contributed to an operating ratio of 98.8 on a consolidated basis, which was a year-over-year improvement of 90 basis points. This included a 60 basis points improvement at YRC Freight with a reported operating ratio of 99.4 and a 190 basis points improvement at the Regional segment to 97.1.

First quarter 2016 tonnage per day decreased 6.7% at YRC Freight and 3.8% at the Regional segment compared to the first quarter 2015.

At YRC Freight, excluding fuel surcharge, first
quarter 2016 revenue per shipment increased 1.8% and revenue per hundredweight increased by 3.7% when compared to the same period in 2015. Including fuel surcharge, revenue per shipment decreased 2.3% and revenue per hundredweight decreased 0.5%.

At the Regional segment, excluding fuel surcharge, first quarter 2016 revenue per shipment increased 0.8% and revenue per hundredweight increased by 2.4% compared to the first quarter 2015. Including fuel surcharge, revenue per shipment decreased 3.1% and revenue per hundredweight decreased 1.6%.

Liquidity Update

At March 31, 2016, the company had cash, cash equivalents and Managed Accessibility under its ABL facility totaling $222.1 million. For comparison,
as of March 31, 2015, cash and cash equivalents and Managed Accessibility totaled $175.6 million.

For the three months ended March 31, 2016, cash used in operating activities was $11.1 million as compared to cash used in operating activities of $25.8 million for the three months ended March 31, 2015, an improvement of $14.7 million.

"While we have made significant strides, we must balance the volume equation with our strategy to get the right freight at the right price running through our networks," Welch continued. "Our intent is to remain disciplined and true to this strategy. We believe that reinvesting in our people, technology and equipment, combined with projected capacity constraints from regulations and eventually a stronger economic environment will bode well for us over the long term. Despite near-term headwinds from decreasing fuel surcharge revenue and an inconsistent industrial
economy, we believe LTL pricing remains rational.

"We take pride in partnering with our customers and their feedback was the driving force behind the addition of YRC Freight's new Accelerated service. The company's existing dual speed network made the addition of this service possible. I'm extremely proud of our employees for implementing this new offering while enhancing our flexible supply chain solutions and most importantly, meeting our customers' needs," concluded Welch.

A live audio webcast of the conference call and presentation slides will be available on YRC Worldwide Inc.'s website yrcw.com. A replay of the webcast will also be available at yrcw.com.

Non-GAAP Financial Measures

EBITDA is a non-GAAP measure that reflects the company's earnings before interest, taxes, depreciation, and amortization expense. Adjusted EBITDA (defined in our credit facilities as Consolidated EBITDA) is a non-GAAP measure that reflects the company's earnings before interest, taxes, depreciation, and amortization expense, and further adjusted for letter of credit fees, equity-based compensation expense, net gains or
losses on property disposals, restructuring professional fees, nonrecurring consulting fees, expenses associated with certain lump sum payments to our IBT employees and results of permitted dispositions and discontinued operations among other items as defined in the company's credit facilities. EBITDA and Adjusted EBITDA are used for internal management purposes as a financial measure that reflects the company's core operating performance. In addition, management uses Adjusted EBITDA to measure compliance with financial covenants in the company's credit facilities and to pay certain executive bonus compensation. However, these financial measures should not be construed as better measurements than net income or earnings per share, as defined by generally accepted accounting principles (GAAP).

EBITDA and Adjusted EBITDA have the following limitations:

EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or fund principal payments on our outstanding debt;

Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to fund restructuring professional fees, nonrecurring consulting fees, letter of credit fees, service interest or principal payments on our outstanding debt or fund our lump sum payments to our IBT employees required under the ratified MOU;

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBTIDA and Adjusted EBITDA should not be considered a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA as secondary measures. The company has provided reconciliations of its non-GAAP measures, EBITDA and Adjusted EBITDA, to GAAP net income (loss) and operating income (loss) within the supplemental financial information in this release.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as "will," "expect," "intend," "anticipate," "believe," "could," "may," "project," "forecast," "propose," "plan," "designed," "enable," and similar expressions which speak only as of the date the statement was made are intended to identify forward-looking statements. Forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of Company management and current market conditions, and are subject to significant business, economic, competitive, regulatory and other risks, uncertainties and contingencies, known and unknown, many of which are beyond our control. Our future financial condition and
results could differ materially from those predicted in such forward-looking statements because of a number of factors, including (without limitation) our ability to generate sufficient cash flows and liquidity to fund operations and satisfy our cash needs and future cash commitments, including (without limitation) our obligations related to our indebtedness and lease and pension funding requirements; the success of our management team in continuing with its strategic plan and operational and productivity improvements, including (without limitation) our continued ability to meet quality delivery performance standards, and our ability to increase volume and yield and the impact of those improvements to meet our future liquidity and profitability; the uncertainty in the overall economy; our ability to finance the maintenance, acquisition and replacement of revenue equipment and other
necessary capital expenditures; our dependence on our information technology systems in our network operations and the production of accurate information, as well as the risk of system failure, inadequacy or security breach; changes in equity and debt markets; inclement weather; price of fuel; sudden changes in the cost of fuel or the index upon which we base our fuel surcharge and the effectiveness of our fuel surcharge program in protecting us against fuel price volatility; competition and competitive pressure on pricing; expense volatility, including (without limitation) volatility due to changes in purchased transportation service or pricing for purchased transportation; our ability to comply and the cost of compliance with federal, state, local and foreign laws and regulations, including (without limitation) laws and regulations for the protection of employee safety and health and
the environment, as well as state and federal labor laws; terrorist attack; labor relations, including (without limitation) our ability to attract and retain qualified drivers, the continued support of our union employees with respect to our strategic plan, the impact of work rules, work stoppages, strikes or other disruptions, our obligations to multi-employer health, welfare and pension plans, wage requirements and employee satisfaction; the impact of claims and litigation to which we are or may become exposed; and other risks and contingencies, including (without limitation) the risk factors that are included in our reports filed with the SEC, including those described under "Risk Factors" in our annual report on Form 10-K and quarterly reports on Form 10-Q.

About YRC
Worldwide

YRC Worldwide Inc., headquartered in Overland Park, Kan., is the holding company for a portfolio of less-than-truckload (LTL) companies including YRC Freight, YRC Reimer, Holland, Reddaway, and New Penn. Collectively, YRC Worldwide
companies have one of the largest, most comprehensive LTL networks in North America with local, regional, national and international capabilities. Through their teams of experienced service professionals, YRC Worldwide companies offer industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence.

Operating ratio is calculated as (i) 100 percent (ii) minus the result of dividing operating income by operating revenue or (iii) plus the result of dividing operating loss by operating revenue, and expressed as a percentage.

SUPPLEMENTAL INFORMATION

Debt Issue

As of March 31, 2016

Par Value

Discount

Costs

Book Value

Term Loan

$

684.3

$

(3.9

)

$

(11.7

)

$

668.7

ABL Facility (a)

-

-

-

-

Secured Second A&R CDA

44.0

-

(0.3

)

43.7

Unsecured Second A&R CDA

73.2

-

(0.4

)

72.8

Lease financing obligations

276.6

-

(1.6

)

275.0

Total debt

$

1,078.1

$

(3.9

)

$

(14.0

)

$

1,060.2

Debt Issue

As of December 31, 2015

Par Value

Discount

Costs

Book Value

Term Loan

$

686.0

$

(4.3

)

$

(12.7

)

$

669.0

ABL Facility (b)

-

-

-

-

Secured Second A&R CDA

44.7

-

(0.3

)

44.4

Unsecured Second A&R CDA

73.2

-

(0.5

)

72.7

Lease financing obligations

278.0

-

(1.7

)

276.3

Total debt

$

1,081.9

$

(4.3

)

$

(15.2

)

$

1,062.4

Our total leverage ratio for
the four consecutive fiscal quarters ended March 31, 2016 was 3.20 to 1.00.

(a)

ABL Facility capacity $450.0M; borrowing base $442.9M; maximum availability $81.5M; Managed Accessibility $37.2M. Managed Accessibility is defined as maximum availability less the lower of 10% of the borrowing base or 10% of the collateral line cap.

(b)

ABL Facility capacity $450.0M; borrowing base $441.7M; maximum availability $79.7M; Managed Accessibility $35.5M. Managed
Accessibility is defined as maximum availability less the lower of 10% of the borrowing base or 10% of the collateral line cap.

SUPPLEMENTAL FINANCIAL INFORMATION

YRC Worldwide Inc. and Subsidiaries

For the Three Months Ended March 31

(Amounts in millions)

(Unaudited)

Three Months

2016

2015

Reconciliation of net loss to Adjusted EBITDA:

Net loss

$

(12.0

)

$

(21.6

)

Interest expense, net

26.0

27.4

Income tax expense (benefit)

(1.8

)

1.4

Depreciation and amortization

40.7

41.6

EBITDA

52.9

48.8

Adjustments for Term Loan Agreement:

(Gains) losses on property disposals, net

(0.3

)

1.3

Letter of credit
expense

2.2

2.2

Nonrecurring consulting fees

-

2.9

Permitted dispositions and other

-

0.2

Equity based compensation expense

1.8

0.5

Amortization of ratification bonus

4.6

5.2

Loss on extinguishment of debt

-

0.6

Other, net (a)

1.7

(2.9

)

Adjusted EBITDA

$

62.9

$

58.8

Operating revenue

$

1,120.3

$

1,186.4

Adjusted EBITDA margin

5.6

%

5.0

%

(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in Adjusted EBITDA.

Three Months

Adjusted EBITDA by segment:

2016

2015

YRC Freight

$

30.1

$

32.1

Regional Transportation

33.4

26.2

Corporate and other

(0.6

)

0.5

Adjusted EBITDA

$

62.9

$

58.8

SUPPLEMENTAL FINANCIAL INFORMATION

YRC Worldwide Inc. and Subsidiaries

For the
Three Months Ended March 31

(Amounts in millions)

(Unaudited)

Three Months

YRC Freight segment

2016

2015

Reconciliation of operating income to Adjusted EBITDA:

Operating income

$

4.1

$

0.2

Depreciation and amortization

22.7

23.9

Gains on property disposals, net

(0.8

)

(0.2

)

Letter of credit expense

1.4

1.5

Nonrecurring consulting fees

-

2.9

Amortization of ratification bonus

3.0

3.3

Other, net (a)

(0.3

)

0.5

Adjusted EBITDA

$

30.1

$

32.1

(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to beincluded in Adjusted EBITDA.

Three Months

Regional Transportation segment

2016

2015

Reconciliation of operating income to Adjusted EBITDA:

Operating income

$

12.4

$

4.6

Depreciation and amortization

18.0

17.7

Losses on property disposals, net

0.5

1.5

Letter of credit expense

0.7

0.5

Amortization of ratification bonus

1.6

1.9

Other, net (a)

0.2

-

Adjusted EBITDA

$

33.4

$

26.2

(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in Adjusted EBITDA.

Three Months

Corporate and other

2016

2015

Reconciliation of operating loss to Adjusted EBITDA:

Operating loss

$

(3.1

)

$

(1.1

)

Letter of credit expense

0.1

0.2

Permitted dispositions and other

-

0.2

Equity based compensation expense

1.8

0.5

Other, net (a)

0.6

0.7

Adjusted EBITDA

$

(0.6

)

$

0.5

(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in Adjusted EBITDA.

SUPPLEMENTAL FINANCIAL INFORMATION

YRC Worldwide Inc. and Subsidiaries

For the Trailing Twelve Months Ended March 31

(Amounts in millions)

(Unaudited)

2016

2015

Reconciliation of net income (loss) to Adjusted EBITDA:

Net income (loss)

$

10.3

$

(19.1

)

Interest expense, net

105.7

118.7

Income tax benefit

(8.3

)

(10.6

)

Depreciation and amortization

162.8

164.2

EBITDA

270.5

253.2

Adjustments for Term Loan Agreement:

(Gains) losses on property disposals, net

0.3

(10.8

)

Letter of credit expense

8.8

9.1

Restructuring professional fees

0.2

3.1

Nonrecurring consulting fees

2.2

2.9

Permitted dispositions and other

0.2

1.8

Equity based compensation expense

9.8

8.2

Amortization of ratification bonus

18.3

20.8

Loss on extinguishment of debt

-

0.6

Non-union pension settlement charge

28.7

-

Other, net (a)

(1.6

)

(8.5

)

Adjusted EBITDA

$

337.4

$

280.4

Operating revenue

$

4,766.3

$

5,044.3

Adjusted EBITDA margin

7.1

%

5.6

%

(a) As required under our Term Loan Agreement, other, net, shown above consists of the impact of certain items to be included in Adjusted EBITDA.

YRC Worldwide Inc.

Segment Statistics

Quarterly Comparison

YRC Freight

Y/Y

Sequential

1Q16

1Q15

4Q15

% (b)

% (b)

Workdays

63.5

62.5

61.5

Total picked up revenue (in millions) (a)

$

695.6

$

737.4

$

719.5

(5.7

)

(3.3

)

Total tonnage (in thousands)

1,485

1,566

1,504

(5.2

)

(1.3

)

Total tonnage per day (in
thousands)

23.38

25.05

24.46

(6.7

)

(4.4

)

Total shipments (in thousands)

2,514

2,604

2,517

(3.5

)

(0.1

)

Total shipments per day (in thousands)

39.58

41.66

40.92

(5.0

)

(3.3

)

Total picked up revenue/cwt.

$

23.42

$

23.55

$

23.91

(0.5

)

(2.0

)

Total picked up revenue/cwt. (excl. FSC)

$

21.42

$

20.66

$

21.48

3.7

(0.3

)

Total picked up revenue/shipment

$

277

$

283

$

286

(2.3

)

(3.2

)

Total picked up revenue/shipment (excl. FSC)

$

253

$

249

$

257

1.8

(1.4

)

Total weight/shipment (in pounds)

1,181

1,203

1,196

(1.8

)

(1.2

)

(a) Reconciliation of operating revenue to total picked up revenue (in millions):

Operating revenue

$

695.7

$

737.6

$

733.7

Change in revenue deferral and other

(0.1

)

(0.2

)

(14.2

)

Total picked up revenue

$

695.6

$

737.4

$

719.5

Regional Transportation

Y/Y

Sequential

1Q16

1Q15

4Q15

% (b)

% (b)

Workdays

64.5

64.5

59.5

Total picked up revenue (in millions) (a)

$

425.1

$

449.1

$

409.4

(5.3

)

3.8

Total tonnage (in thousands)

1,900

1,976

1,761

(3.8

)

7.9

Total tonnage per day (in thousands)

29.46

30.64

29.59

(3.8

)

(0.4

)

Total shipments (in thousands)

2,558

2,617

2,388

(2.3

)

7.1

Total shipments per day (in thousands)

39.65

40.58

40.13

(2.3

)

(1.2

)

Total picked up revenue/cwt.

$

11.19

$

11.36

$

11.63

(1.6

)

(3.8

)

Total picked up revenue/cwt. (excl. FSC)

$

10.27

$

10.03

$

10.50

2.4

(2.2

)

Total picked up revenue/shipment

$

166

$

172

$

171

(3.1

)

(3.1

)

Total picked up revenue/shipment (excl. FSC)

$

153

$

151

$

155

0.8

(1.4

)

Total weight/shipment (in pounds)

1,486

1,510

1,475

(1.6

)

0.8

(a) Reconciliation of operating
revenue to total picked up revenue (in millions):

Operating revenue

$

424.8

$

448.8

$

409.2

Change in revenue deferral and other

0.3

0.3

0.2

Total picked up revenue

$

425.1

$

449.1

$

409.4

(a) Does not equal financial statement revenue due to revenue recognition adjustments between accounting periods.

(b) Percent change based on unrounded
figures and not the rounded figures presented.